Updated  January 7, 2021

Overview

Despite Europe’s large population, tremendous spending capacity, and consumers’ liberal attitudes toward cannabis, the region has shied away from more progressive policy regarding cannabis which has resulted in its markets largely taking a back seat to those of its North American peers.

Though international bodies such as the United Nations (UN) – largely influenced by and influential in Europe – have continued to express opposition, there appears to be growing interest in more permissive policy with regard to cannabis scheduling. For example, in early 2019, the World Health Organization (WHO) formally recommended that cannabis be rescheduled to a less strictly regulated category, and though the United Nations Commission on Narcotic Drugs’ (CND) delayed the vote on rescheduling twice, it was ultimately decided in December 2020 (by a narrow majority) that cannabis and cannabis resins should be removed from Schedule IV and placed in Schedule I. Though it remains under tight international controls, the move tacitly acknowledged the medical value of cannabis. Meanwhile, countries throughout Europe have been actively developing and adapting regulatory systems to open, build upon and expand cannabis operations despite traditionally having been among the most conservative developed nations to move forward with cannabis legislation. Though advances have been made in a measured fashion, nonetheless, regulatory frameworks and markets are taking shape – with some European countries even broaching adult-use cannabis authorization.

Today, the European legal cannabis market remains rather small, but it is poised to grow rapidly as more supportive country- and continent-level (or global) regulations continue to be put in place, paving the way for more stable and scalable medical cannabis growth. Many countries have chosen to authorize medical cannabis sales, though typically under restrictive regulatory frameworks that loosen (UK) or adapt (Denmark) over time. Most remain in early stages, only seeing incremental growth at this juncture, though the progress seen in Germany will lead the way in driving a US $359 million cannabis market in Europe in 2020. Brightfield anticipates medical cannabis – and to a limited extent, adult-use – will expand significantly over the next five years, reaching a total value of $3.1 billion by 2025.

The primary medical cannabis market in Europe today is Germany – ahead by a huge margin – followed by Italy and Denmark. More medical markets are close to emerging after much anticipation, such as that of France, and we expect to see some incremental growth of adult-use markets in the Netherlands in 2021 (through a government experiment allowing for a shift of supply to a legal framework, with product to be sold through existing coffee shop channels in limited regions), and Switzerland the year following. The report pages below include analyses of regulatory structures and market conditions in each country, highlighting the pros, cons, prospects and potential stumbling blocks of operating in each market.

Market Size & Projections

• Europe’s cannabis market is projected to reach US $359 million in 2020, an incline of 25% from 2019, and will grow to over US $3.1 billion by 2025, with a 2020-2025 CAGR of 52%.
• In 2020, all legal sales remain medical and this channel will continue to be the dominant driver of growth. However, two adult-use trial programs (Switzerland, Netherlands) are on track to begin in 2021-2022 and generate US $165 million in annual sales by 2025. No full-fledged adult-use programs are in the pipeline within the forecast period.
• By far the largest medical cannabis market today and projected for 2025 is Germany, which will reach a market size of $267 million in 2020 and is expected to have a $2.1 billion market by 2025.
• The greatest growth rate among the region’s medical markets will be seen in the UK, which is expected to see a 2020-2025 CAGR of 98%. This is largely due to the expected loosening of regulations (general practitioner prescriptions, domestic cultivation) making cannabis more affordable and accessible, even if attained through private clinics – which are already expanding – rather than the NHS.
• The Swiss, Dutch and French markets will also see rapid growth between 2021 and 2025. In Switzerland, this is a result of the opening up of a formal medical program to a market with vast unmet demand. In the Netherlands, a closed coffee shop experiment (adult-use pilot) will drive rapid growth despite only providing access to <10% of the country’s current adult-use consumers. And in France, a long-awaited medical pilot program will materialize in 2021 and run for three years, leading into the launch of a formal medical program toward the end of the forecast period – the latter of which should generate substantial revenues.
• Denmark and Poland also offer promising prospects. With domestic cultivation around the corner in Denmark and more products being approved by the Danish Medicines Agency, the country’s medical pilot program is well-positioned for growth, as is its cannabis export market. In Poland, though medical cannabis is still unaffordable for a large proportion of the population, it looks probable that future reductions of the cannabis VAT will shift pricing downward substantially and open the market up to a larger portion of the sizeable population.

Growth Drivers

Though cannabis sales were expected to drop in 2020 as a result of the effects of COVID-19 on supply chains and patient enrollment, on the contrary, they have risen by 28% year-over-year. Economic troubles are plaguing the continent and dampening spending overall as a result of the ongoing COVID-19 pandemic, but this has impacted cannabis spending very minimally, especially among cannabis patients who receive insurance coverage. In many cases, cannabis is a last-resort medication thus it receives spending priority. In others, increased telehealth access driven by the pandemic has actually ushered in more cannabis patients than would otherwise have had access or the willingness to enter their physicians’ offices in search of cannabis, driving patient growth. In addition, supply chains have experienced only minor hiccups in the region despite the tremendous amount of transatlantic and inter-continental shipping the European cannabis market depends on. With few real setbacks in 2020 despite the backdrop of a volatile and vulnerable global economy, Europe’s overall cannabis market is on course to grow and thrive as it builds on its current infrastructure, breaking the US $1 billion mark for the first time in 2022.

The UN Commission on Narcotic Drugs (CND) is looking more and more likely to readdress its guidelines and encourage fewer restrictions on medical cannabis, with the support of the WHO recommendations and many country leaders, businesses, industry and trade associations in the region working to have these changes enacted sooner rather than later. Though strictly speaking, nations can and have acted outside the bounds of UN conventions, European countries are among the most likely to adhere to them. Thus, any UN decision in favor of cannabis would be particularly influential upon the growth and acceptance of cannabis in the region.

In recent years, an increasing number of European countries have begun adopting policies allowing medical cannabis products into the market beyond finished pharmaceuticals (e.g. Sativex, Marinol), which has opened up the market to a great deal of new consumers who either did not have a need for these specific formulations, or who could not afford their hefty price tags. In addition, more liberal regional and national stances toward cannabis, especially as reflected in policy and regulatory adjustments, are encouraging a greater number of physicians to consider and prescribe cannabis. Doctors continue to act as an important barrier to patient growth, thus the buy-in of these gatekeepers – attained through wider political and cultural acceptance, local-level education and advocacy – is and will continue to be vital to medical market growth.

2021 will see both the Dutch coffee shop experiment and French and Swiss medical pilot programs come online, though while the former and latter are poised to see significant growth over the forecast period, those supplying France’s pilot must furnish product for free – thus no sales will take place until an expected medical program launches following the three-year trial's conclusion, leading to substantial growth beyond 2024.

Ultimately, as more patients, doctors, pharmacists and government decision-makers are exposed to functional regulated cannabis programs and the legitimacy of cannabis as medicine continues to be more broadly recognized, more support for legalization, accessibility and affordability (including via insurance coverage) will build, generating a gradual swell across the region.

Evolution of the Market

The evolution of European cannabis markets has been distinct from that seen in most other developed nation markets. In North America, for example, many US states and the Canadian federal system have largely used medical programs as a springboard to adult-use programs that function much the same way (same suppliers, products, at times distribution channels and pricing models) with some minor adaptations to meet the needs of a wider market. In Europe, conversely, the two are seen very differently – with medical markets often being the primary or exclusive focus. As such, at this juncture most European countries are intent on building up and lifting limitations within their medical markets, where the vast majority of market activity will take place in the coming years. In this sense, serious competitors looking to invest in the medical space can do so relatively well-assured that medical sales will not be cannibalized by adult-use markets.

However, there are various potential exceptions. For example, by 2022, adult-use cannabis will be made legally available in two countries - the Netherlands and Switzerland. Both are pilot programs, meaning sales are limited and there is no guarantee legalization will occur as a result, though the two governments intend to use pilot findings to inform formal adult-use policy considerations after the trials conclude. These pilots – and the wider adult-use programs they may preclude – are intended to be completely separate from the medical markets of each country. While it is possible there will be shared suppliers, they will go through separate, distinct authorization processes and tenders (and in fact, Bedrocan, the exclusive Dutch medical provider, has been very explicit that it will not be involved with adult-use), as well as supply chains. In addition, though it would offer a smaller market, Luxembourg is also intent on legalizing adult-use cannabis in the medium term.

CBD products available over the counter in much of the region also continue to compete with formal medical cannabis markets due to CBD’s broad availability and lower price points, but this phenomenon is expected to be largely temporary. As medical programs professionalize, gain more physician and regulator buy-in and advocacy, become more price-competitive and less stigmatized among patients, the safe and regulated nature of medical cannabis and wider scope of available products, as well as the prospect of insurance coverage, are expected to drive medical market growth by appealing to the myriad patients whose needs are not met by the CBD wellness market.

Regulatory Overview

As many of the long-held fears surrounding cannabis have been proven to be unfounded, and numerous North American and European countries have demonstrated it is possible to create a safe, regulated market for the controlled substance, international organizations are facing increasing pressure from member states to rethink their positions regarding cannabinoids. This is especially true in Europe, where new countries are establishing medical cannabis markets with great frequency and the growth potential remains substantial.

• In January 2019, the WHO officially recommended the rescheduling of cannabis and cannabis resin within the 1961 convention on Narcotic Drugs - the global standard for drug policy. Their proposal would reschedule cannabis out of the most restrictive category.
• The United Nations Commission on Narcotic Drugs (CND) delayed the official vote twice due to the complexity of the regulations and member states requiring more time to consider the recommendations prior to voting. In December 2020, the UN CND removed cannabis from Schedule IV, placing it in Schedule I and acknowledging the medical potential of cannabis.
• Meanwhile, the European Union's Parliament voted to “allow doctors to make free use of their professional judgment in prescribing regulatory-approved, cannabis-based medicines to patients with relevant conditions, and to all pharmacists to lawfully honor those prescriptions," effectively encouraging its member states to adopt and enact medical cannabis programs if they deem it appropriate.
• Many countries have begun enforcing Novel Foods policy with regard to the CBD products available for sale within their borders. Though this only positively affects the medical market for now (as alternative CBD products are being pulled from shelves, driving patients toward available formal channels), it could eventually drive competition with adult-use markets as ingestible CBD products start to become authorized and widely available.
• A full discussion of current regional regulatory frameworks is available on the Regulatory Review page.

Competitive Landscape

The European cannabis market is well-positioned to grow substantially in the medium term, given the number and scope of medical programs and adult-use trials in line to launch and expand, and opportunities abound for those willing and able to overcome relatively steep barriers to entry, such as EU-GMP certification. In recent years, this market has drawn investment from many large international cannabis companies seeking to set up and expand operations in the continent, though recently there has been a pivot toward European cannabis firms, both new and established, looking to successfully build up operations in the region. Given the cash constraints and investor demands particularly Canadian cannabis entities are facing today, many of the traditional global market behemoths are slowing or even halting operations in various parts of Europe. With these players constrained, 2021 will offer a strategically advantageous opportunity for local players to join the market and thrive with significantly more white space available than was previously – coupled with fewer start-up costs given their geographic proximity and beneficial regional policies.

One caveat, however, is that a number of Canadian licensed producers have in recent years established major grow (Denmark, Portugal) and distribution operations (Germany) in Europe, many of which are just getting off the ground, thus companies like Aurora, Aphria and Tilray will have enhanced reach in the region as those scale to full capacity – even with minimal additional investment.

Today, top competitors in the region include:

European Producers

• Dutch entity Bedrocan is the largest producer of medical cannabis in Europe and holds a monopoly on production in the Netherlands, with substantial exports to other key European markets such as Italy and Germany.
• GW Pharmaceuticals is based out of the United Kingdom and is the producer of Sativex, a pharmaceutical cannabis product which is sold in more than a dozen European nations, including many which do not have formal medical cannabis programs. The company also manufactures Epidyolex, a CBD-only formulation, which has begun sales in Germany and the UK, and been authorized in Italy, Spain and France.
• UK-based EMMAC Life Sciences, vertically integrated producer and supplier of medical cannabis and hemp, has extensive operations in the region, including a cultivation center in Portugal (Terra Verde), API manufacturing through Medalchemy (Spain), and the UK’s first operational distance cannabis pharmacy (CBPM Access) via subsidiary Rokshaw.
• Medicinal cannabis company Demecan, headquartered in Berlin, was one of only three cultivators approved to grow product in the country. Germany-based Cansativa was the only distributor authorized by the government to relay newly-authorized domestic wholesale supply to pharmacies (product to hit market in 2021).

Canadian Licensed Producers

• Aurora Cannabis, a large Canadian licensed producer (LP), has operations in numerous European countries and cultivation facilities operational in Denmark via its subsidiary Aurora Nordic. Though the company has been shutting its offices in various countries (Portugal, Spain, Italy) and reducing staff elsewhere to reduce costs, it still maintains operations around the region and received one of the coveted domestic cultivation licenses in Germany – which the company considers priority.
• Aphria Inc. shipped its first medical cannabis products to Germany in October 2020 and owns a major German pharmaceutical distributor (subsidiary CC Pharma), which should help scale its operations in the domestic market quickly. The LP was the third company to receive a cultivation license in Germany, and has additional sales and operations in Denmark and Malta.
• Tilray has operations around the continent, with product distribution agreements in place in Germany as well as products available in UK, Ireland, Switzerland, Czech Republic and elsewhere, and cultivation operations online in Portugal. Tilray and Aphria agreed to merge (under the Tilray name) in December 2020, and adjustments to streamline European operations are expected in 2021.
• Canopy Growth Corporation, the largest LP in Canada, has operations in several European nations (Germany, UK, Denmark, Poland, Luxembourg, Czech Republic, Spain) via its premier subsidiary Spectrum Therapeutics. The company also has cultivation operations in Spain and Denmark, along with medical vaporizer manufacturing in Germany.
• Detailed profiles covering important players on Europe's cannabis market are available on the Competitive Landscape page.